NIC Inc
Q1 2017 Earnings Call Transcript

Published: 2 May 2017

[Operator:]

Good day and welcome to the NIC Inc. 2017 First Quarter Earnings Announcement. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. Angela Davied. Please go ahead, ma’am.

[Angela Davied:]

Thank you, operator. Good afternoon, everyone and welcome to NIC’s first quarter earnings call. The press release for NIC’s first quarter 2017 earnings announcement was issued 30 minutes ago. Our earnings release is also available on our corporate website at egov.com/investor-relations. You may also call our headquarters at 877-234-3468 and we will e-mail the information to you. Following a reading of our cautionary statement regarding forward-looking information, CEO, Harry Herington; Chief Operating Officer, Robert Knapp; and Steve Kovzan, NIC’s Chief Financial Officer will deliver prepared remarks. Then we will open for questions. Any statements made during this call that do not relate to historical or current facts constitute forward-looking statements. These statements include estimates, projections, the expected length of contract terms, statements relating to the company’s business plans, objectives and expected operating results, statements relating to possible future dividends, and the assumptions upon which those statements are based. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements, including regional or national business; political; economic; competitive; social and market conditions, including various termination rights of the company and its partners; the ability of the company to renew existing contracts and to sign contracts with new states and federal government agencies as well as possible data security incidents. You should not rely on any forward-looking statement as a prediction or guarantee about the future. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the sections titled Risk Factors and Caution About Forward-looking Statements of the company’s most recent Forms 10-K and 10 Q filed with the SEC. These filings are available at the SEC’s website at sec.gov. Any forward-looking statements made during this call speak only as of the date of this call. We undertake no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise. Today, before I introduce our CEO, Harry Herington, I want to congratulate him. Harry was recently named as one of the top 25 Doers, Dreamers & Drivers of Digital Government by Government Technology Magazine. This award is given annually by one of the leading sources of digital government news and recognizes individuals in the digital government field, who demonstrate that the use of innovative technology can transform government operations, dramatically improve citizen engagement and enhance service delivery. Harry is also the only individual honorary you recognized this year from the private sector. All of that said, NIC could not be prouder of our CEO. He is truly a leader within digital government and challenges all of us everyday to dream about how government interactions could be better and save people time and he encourages us to drive that change forward hand in hand with our government partners. On behalf of everyone at NIC, Harry, congratulations. And with that, it is now my pleasure to introduce Harry Herington, NIC’s Chief Executive Officer and Chairman of the Board.

[Harry Herington:]

Thank you, Angela and thank you for this awesome introduction. Welcome to our first quarter earnings call. Although I am very honored to be recognized as a Doer, Driver & Driver within the digital government industry, it is not a recognition I can claim credit for. The real credit goes to each and every NIC employee and government partner. They are the ones who innovate day in and day out. They are the ones on the frontlines driving through change and help citizens and businesses interact with government. It is their success that gardened the attention of the industry and I applaud them. I also congratulate them for making a difference everyday. Just a few weeks ago, I had the opportunity to meet with our great group of government partners as we welcomed them to Little Rock, Arkansas for our 2017 Partner Conference. The theme of the meeting was together building the government of tomorrow today. Tomorrow, during our Annual Stockholders Meeting, I will share more about how the future really is taking shape today and how we are evolving NIC strategy. However, this theme together building the government of tomorrow today also sums up the first quarter of 2017. There were several ways we advanced digital government across many states and we truly are shaping the future of government interactions across the country. First, you may recall that last year at our Annual Stockholders Meeting, we introduced to you the Gov2Go, the digital government assistant that learns about you, tracks your government interaction and notifies you when it’s time to complete a transaction. During the first quarter of 2017, we continued to expand this platform. We recently added Gov2Go Pay, which enhances the platform with one click payments. This allows citizens to enjoy the same, quick purchase convenience as they do today through major online retail sites, like Amazon. In addition, I am pleased to announce that Nebraska became the latest state to deliver digital government services via the Gov2Go platform. The initial 8 services available on Nebraska include alerts and reminders for property taxes, state income taxes, border registrations, state park permits, electrical license renewals, pesticides dealers and product registration renewals and weighing and measuring device registrations. I am very pleased to see the convenience of Gov2Go, receive more citizens. And I absolutely know this will transform how people interact with government in the future. I also have good news to share regarding progress with the federal Recreation One Stop or recreation.gov. You may recall nearly a year ago, the U.S. Department of Agriculture offered support service award in Booz Allen Hamilton, the contract for Recreation One Stop support services, which provides reservation services for federal, recreational areas and facilities through recreation.gov. At that time, we announced our payment agreement with Booz and our intention to sign the subcontract with them to provide certain services related to the contract. However, you will also recall upon the initial contract award, the incumbent provider protested it. That protest went through several stages, including with the recent ruling by the U.S. Court of Federal Claims in favor of the government. The protest is over and we believe there are no additional hurdles to be clear. During this protest period, we have begun building out our team in anticipation of this day and are working to establish the final timelines with Booz and our recreation.gov federal partners aiming for a target to launch the new solution in October 2018. Once Booz prime contract for the federal government and our subcontract with Booz are finalized, we will provide some color on our financial projections for this service on future earnings calls. Until that time I will just say, we are obviously pleased to see this exciting partnership move forward. While we are bullish about what the future may bring with these new developments, it was a collection of several pride and true services such as motor vehicle inspections, motor vehicle registrations, payment processing, property tax payments and business registration filings that drove healthy revenue growth in the first quarter of 2017 as well as solid same-state growth from Interactive Government Services. In fact, IGS revenues were up 10% over the first quarter of 2016. Steve will dive into more financial details in a moment, but overall I am pleased with our growth this quarter as well as all of the new developments on the horizon. A few weeks ago, our government partners left Little Rock expressed in their confidence in the NIC and their belief that we are doing the right things to drive digital government innovation across the United States. This reaffirmed to me that we are delivering the best services possible to our partners and these services continue to drive healthy financial results and provide steady growth for our company. With that, I will turn the call over to Robert Knapp, NIC’s Chief Operating Officer for additional insights into our operations. Robert?

[Robert Knapp:]

Thank you, Harry. As I prepared the updates to share with you this quarter, I will just remind you that during the first quarter call last year we announced the exciting launch of the comprehensive recreational outdoor licensing system, Go Wild Wisconsin. That system continues to perform very well. And most recently, our team and partners in Madison kicked off the 2017 Spring Turkey Hunting Season resulting in more than 66,000 permits sold in a 6-day period. At peak volumes, 5,000 people were waiting in the online queue for permits to go on sale. Today, I have another positive development to share from Wisconsin. The portal will be working with their partners at the Wisconsin Department of Transportation to build a new title and registration processing solution. Once completed, the new digital service will provide all of the title and registration services required with the sale of it or transfer of a vehicle and will also enable vehicle registration renewals. This new solution will include a new front end online service and updates to the back end web services used by dealer management systems. This comprehensive system will include enhancement such as heavy vehicle registrations, online training and e-mail reminders. It will also allow authorized users to order license plates and stickers directly from the Wisconsin Department of Transportation. The current system processes approximately 2.7 million transactions annually. Starting in the second quarter, we expect to incur approximately $300,000 in costs per quarter to build out the system, with the goal of a pilot phase launch in the early to mid 2018 with the full launch shortly thereafter. Based upon our current projections, we estimate the service could generate upwards of $2.5 million to $3 million in annual revenues, which is modestly higher than the annual revenues we earned from Go Wild Wisconsin. Needless to say, we are thrilled with this new piece of business and we thank our partners at the Wisconsin Department of Transportation for continuing to place your trust in us. This quarter, we also continued to expand the scope of Your Pass Now. As you may recall, we initially launched the digital park pass service as part of a pilot project with the Department of Interior, National Park Service in 3 national parks

[Steve Kovzan:]

Thanks, Robert and good afternoon to everyone on the call. NIC produced healthy financial results for the first quarter of 2017 earning $0.21 per share compared to $0.19 in the prior year quarter. Results for the quarter include certain discrete tax benefits that positively affected EPS this quarter, resulting from adoption of the new accounting standard for stock-based compensation. The new rule simplifies several aspects of accounting for stock-based compensation, including the related impact on accounting for income taxes and the deductions we recognized when restricted stock awards vest. When such awards vest, if the stock price has risen since the date of the awards were granted, we recognized what are referred to as excess tax benefits, which are tax deductions over and above those we expected to realize when the awards were first granted. With the adoption of the new rule, excess tax benefits generated when awards vest are now recognized as a reduction to the provision for income taxes. Previously, we recognized such benefits and additional paid in capital in the balance sheet. In other words, there used to be no effect on the income statement, but now there is. This resulted in a $500,000 reduction in our income tax provision, increasing earnings per share for the first quarter by approximately $0.01. It also contributed to the lower effective tax rate for the quarter of 34%, down from 37% in the prior year quarter. Keep in mind that the opposite could happen in future quarters if we had a tax deficiency, which would increase the provision for income taxes and lower earnings. Because we currently grant most restrictive stock awards to executives and management level employees in the first quarter of every year, we currently expect most excess tax benefits or tax deficiencies to be recognized in the first quarter of each year when awards vest. Finally, this change was purely a GAAP accounting rule change. It does not change the cash taxes that we ultimately pay. One final note on taxes for the quarter, the lower effective tax rate was also impacted by favorable benefits related to the domestic production activities deduction, which you may recall we began recognizing in the third quarter of 2016. Moving on to the core financial results for the quarter, during the first quarter of 2017, total revenues grew 6% to $83.2 million, with portal revenues of $77.2 million, up 5% over the prior year quarter. Total same-state portal revenues grew 5% for the quarter, breaking down the components of same-state revenue growth. Same-state IGS transactional revenues grew 10% this quarter mainly due to the consistent deployment of new services and increased adoption of existing services across several portals, including motor vehicle inspections and registrations, property taxes and business registration filings among others. Same-state DHR transactional revenues were up 1% for the quarter. And finally, same-state software development revenues decreased 31% for the quarter. This was somewhat anticipated as we cycled against an exceptionally strong quarter of 25% same-state T&M growth in the first quarter of last year driven by select number of large projects in a few states. As I mentioned last quarter in my prepared remarks on our 2017 guidance, we currently expect same-state T&M revenues to be somewhat of a headwind this year after an unusually strong year of nearly 20% growth in 2016. Results for the first quarter of 2017 also included revenues of approximately $1.6 million from the company’s newest portal in Louisiana compared to approximately $200,000 in the prior year quarter. In addition, revenues from the Tennessee portal contract totaled approximately $1.8 million for the current quarter compared to $2.3 million in the prior year quarter. Our contract with the State of Tennessee expired on March 31, 2017. We have concluded the transition of all services to the state and we do not currently anticipate any additional revenue from Tennessee. Next, software and services revenues grew a healthy 15% for the quarter, again driven by continued strong performance from the pre-employment screening program, which we have managed for the U.S. Department of Transportation, Federal Motor Carrier Safety Administration and from other payment processing services. Our growth for the quarter produced operating income of $21.1 million, up 4% from the prior year quarter, resulting in an operating income margin of 25%, down slightly from 26% in the prior year quarter. Moving on, factoring in the incremental spend we will make in Wisconsin to build out the new title and the registration processing system throughout the rest of the year that Robert just mentioned, we remain comfortable with the revenue and earnings guidance ranges for full year 2017 that we shared with you on our last earnings call back in February. Recall that our guidance includes approximately $4 million of investment, mainly for Gov2Go and the enterprise licensing and permitting platform that we intend to use in Illinois and elsewhere in certain portal states. Contract negotiations continue to progress in a positive direction with the State of Illinois. And once they are concluded and a contract is signed, we will share more financial color with you on a future earnings call. Furthermore, as Harry just mentioned, once Booz Allen Hamilton’s prime contract of the federal government and our subcontract with Booz are finalized, we will provide more color on our financial projections for the Recreation One Stop award on the future earnings call. In conclusion, I was pleased with our financial performance in the first quarter of 2017 and I know we are doing the right things to develop and deploy new innovative solutions with our government partners that we expect will continue to grow the company and keep us at the forefront of the digital government evolution. With that, I will turn the call back over to Harry.

[Harry Herington:]

Thanks, Steve. I agree. I too was pleased with our results for the quarter. After networking and collaborating with our partners a few weeks ago in Little Rock at a partner conference, I am confident we have built strong, lasting partnerships and are developing the types of innovative services citizens and businesses want and deserve. With that, operator, we will now open the call up for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from John Campbell with Stephens Inc. Please go ahead.

[John Campbell:]

Hey, guys. Good afternoon.

[Harry Herington:]

Good afternoon.

[Steve Kovzan:]

Hey, John.

[John Campbell:]

Congrats on the quarter and contract renewals and federal progress and Harry, congrats on the award, it seems like things are going well.

[Harry Herington:]

Thank you.

[John Campbell:]

Absolutely. Just I was checking on this, Steve, as it relates to guidance, are you guys factoring in, I guess, for the full year guidance factoring the loss of Tennessee and then I guess you include nothing from the upcoming Illinois deal, is that right?

[Harry Herington:]

That’s right. You got it exactly right. We won’t recognize anymore revenue in Tennessee for the rest of the year. So what we recognized in Q1 is it and we have not reflected any revenue in our guidance yet from Illinois. There is certainly a possibility that could be the case for you to get a contract signed and progress on that, but at this point we have not.

[John Campbell:]

Okay, that’s helpful. And then I guess just as far as timing with Illinois contract, would you guys have it right now relative to kind of where you have had other newer contracts, what’s the difficult turn time you usually see?

[Harry Herington:]

To deal with these contracts as each state is different, actually, every contract is different. We can’t even speculate on the time, because every state has different approval processes. They have to go through different individuals that have to sign off on it. And all I am saying is it’s progressing nicely and I am confident that they had some movement in the right direction.

[John Campbell:]

Okay, that’s helpful. And then I am sure you guys are going to get this question almost every quarter until we get a little bit more clarity on the federal side, but it sounds like that you expected to go live in 2018 and you are going to give us, I guess, a little bit more granular financial details at that time, but just 10,000 foot view, could you guys maybe help just very broadly size it up, are we talking about $1 million type annual contribution or is it tens of millions anywhere in that territory?

[Harry Herington:]

Yes. I understand your frustration and trust me, you know me I would love to be as transparent as I can. The problem we have got is Booz hasn’t negotiated with the federal agency yet, okay. And we haven’t finalized negotiating with Booz until that happens and we are pretty much, I don’t want to use the word gag order, but we are pretty much – we can’t talk about. Even if, I thought that I could share somebody, I am not allowed to talk about it until they finish what they are doing. So I can’t speculate I can’t talk in my sleep on this one.

[John Campbell:]

That’s totally understood. Thanks, guys.

[Harry Herington:]

Sure, John.

[Operator:]

Moving right along, our next question comes from Brian Kinstlinger with Maxim Group.

[Brian Kinstlinger:]

Great. Thanks, guys. First, you had mentioned, obviously, the Illinois relationship. I am curious if you could just talk about the feedback so far from the customer regarding the platform?

[Harry Herington:]

Well, the issue that we have got right now around here is that we are in the process of negotiating with them. I mean, clearly, they were very excited about it, because we went through the present – we went through the orals with them and we have had conversations. I mean, this is what they need and it’s a solid platform that we think we will be able to use in many locations, but beyond that there is really not a lot I can tell you till we finalize our discussion with them.

[Brian Kinstlinger:]

But then given you are developing this platform and that they were going to use, once you do move into contracts, will you still have the typical startup costs that you see in the state or does could kind of take care of some of those startup costs?

[Steve Kovzan:]

Brian, this is Steve. Certainly, we are going to have incremental startup costs beyond what we are spending right now. We are building the licensing and permitting platforms that we will ultimately use in Illinois, but we are also going to use in at least one other state to replace a legacy system and potentially in a couple of other states. But certainly, once we sign a contract, we will then have some incremental spend for folks that will be dedicated to Illinois. So yes, we will also have kind of some of the typical startup in terms of staffing up a local team for Illinois.

[Brian Kinstlinger:]

Great. And then congrats with Booz Allen behind you, I know the process is super frustrating and I won’t ask any numbers questions. But you mentioned October 18 is the launch. I am curious, is it possible that you can recognize revenue before the launch or is that whenever it launches at the first time you might generate revenue on that contract?

[Steve Kovzan:]

Again, I can’t even speak to this. I am not allowed to speak to this until. And you can understand that. I have got restrictions from Booz Allen. I have got the restrictions from the federal agency. I mean until we get through this, I am just prohibited from talking.

[Brian Kinstlinger:]

Okay. On the Tennessee revenue, can you tell us where that was is it IGS, DHR or something else so we can kind of think about where the revenues can come out of in the second quarter? Can you remind us?

[Steve Kovzan:]

It’s a little bit of both. I would say that it’s a combination of DHR and IGS and a little bit of software development kind of project management in total.

[Brian Kinstlinger:]

Okay. And then finally, every quarter, I will ask it for many years now, obviously, just curious if there are any new RFPs that are in the pipeline right now?

[Steve Kovzan:]

No, there is no RFPs that are in the pipeline right now. I mean, we are having great conversations across the country, but that’s where it stands. So I guess, more specifically, there are no RFPs on the Street today that are – that just want to clarify what Harry is saying.

[Brian Kinstlinger:]

Yes, yes. I got it. Thank you.

[Steve Kovzan:]

Okay.

[Operator:]

Our next question comes from Joseph Vafi with Loop Capital.

[Joseph Vafi:]

Hi, good afternoon. Thanks for taking my questions. If you could just circle back to the Illinois contract for a second. Was there, I mean I think I was modeling maybe perhaps a little bit more in startup costs there in Q1 for Illinois. Is there – how much more do you expect Illinois cost to ramp during the Q2 and beyond versus what happened in Q1?

[Harry Herington:]

Well, we – Joe, we haven’t yet kind of provided guidance there yet simply, because again we haven’t signed our contract there. In our current guidance, we are projecting for the year about $2.5 million to build out that licensing and permitting platform that’s going to be used there and in other states. But we haven’t yet provided guidance and there is no startup expense – incremental startup expense in our guidance at the current time for Illinois.

[Joseph Vafi:]

Okay, that’s helpful. And then just basically going back to Brian’s previous question on the RFP pipeline and business opportunity going forward. I was wondering if you could provide an updated view on the M&A that you may have given that it doesn’t seem to be a lot going on in the RFP pipeline you have got a nice cash balance and the like and things in government, in technology are moving pretty rapidly. Are there opportunities out there to maybe expand your business model beyond what you are doing now except leverage your client relationships and your know-how inside your clients?

[Harry Herington:]

I will answer that. This is Harry. Couple of things. Number one, don’t take the fact that there is not an RFP on the Street as if there is not a pipeline active and that we are not working numerous opportunities out there. Okay. So I just wanted to spill that a little bit. We are in great conversations, several places across the country. M&A is a great question, and it’s one I get as you can imagine on a regular basis. We constantly are evaluating opportunities that are out there, things that we think can either bring value group to NIC whether that be a technology we don’t have, whether that be contract vehicles that we could find value in, whether that brings the revenue source for us. We have always said, we wouldn’t grow our company by acquisition in other words, acquire just get some of this revenue, because the interpretation of your tailwind you do that, but we are always constantly evaluating what’s out there. As you can imagine, people knock on our door locks and we get to see what’s out there and see whether it fits or not. And so I can’t say that there is something that we are actively looking at it, I can’t say there is not. But what I can tell you it is on our radar and we have made no sense. If we find the right opportunity, we do have the cash and the build – we are debt. They will need to borrow money before that, but it has to be the right opportunity.

[Joseph Vafi:]

Okay, thanks. And then just one quick follow-up on the federal side, is there any – are you seeing increased activity there, new opportunities to partner based on what you have done so far with Booz and any other contracts for basically is that piece of the business or opportunities accelerating there about the same? Thanks.

[Robert Knapp:]

Yes, Joseph, this is Robert. I will tell you, our federal business practice as you is exciting as if it has been in a long time we have a lot of opportunities that we are developing. And yes, when you look at what we have done with Your Pass Now in some of the national parks and both with the Department of interior and with the U.S. portal Service, those certainly are great talking points for us to show our abilities and to be able to use those in other agencies across the federal government. And so, there’s still a lot of appointments and so forth going on with the administration. And so that certainly adds an element of bureaucracy that we have to continue to manage through and as those appointments become more and more solidified across federal government, we certainly think the opportunities are very strong as we continue to push forward.

[Joseph Vafi:]

Great, thanks very much.

[Robert Knapp:]

Great. Thank you.

[Operator:]

Our next question comes from Gary Prestopino with Barrington Research.

[Gary Prestopino:]

Hi, good afternoon everyone.

[Steve Kovzan:]

Hi Gary.

[Gary Prestopino:]

Couple of questions here. First of all, just on the tax rates, Steve, your guidance called for 36.5% and obviously, you explained what happened in Q1. Should we use the 36.5% tax rate for the rest of the year, every quarter?

[Steve Kovzan:]

Yes. I mean, I think, tax rate going forward absolutely as the year is certainly fine and conservative. And that, when we estimate our tax rate for the year, certainly when we did that in our guidance, we didn’t take into consideration kind of some of these windfall tax benefits that we incurred here in the first quarter. But going forward, I think it’s not going to be closer to that rate than where we are today.

[Gary Prestopino:]

Okay. And in regards to recreation.gov, I know you can talk and say much about it, but you are still anticipating that there will be startup expenses that you will make us aware of that once you are able to talk about the contract in general?

[Steve Kovzan:]

Yes. Absolutely, and we have mentioned that in our last call, I mean, we expect, this is going to be a 15-month startup phase in period on this deal. So yes, we expect to incur startup expenses probably over little bit longer time period than we normally do for a typical portal opportunity.

[Gary Prestopino:]

Okay. And then the Gov2Go, it’s nice to hear that Nebraska has now adopted it, but are you giving that away as an additional service or is there any incremental charge for that?

[Harry Herington:]

Well, as we go into the states where we are platforms, this is a platform that we are able to bring in and then start layering on top of that services so we neither have to add more individuals and be a more proactive manner of doing digital government. If we are going to non-NIC states that some would have to consider.

[Gary Prestopino:]

Okay, that’s right. You were going to possibly charge for non-NIC states, I recall that now. And then lastly, as far as some of the numbers on the expenses on, this maybe has been asked, but I don’t recall you mentioned, it was there. Anything in there in terms of the expenses worn as high as you guys had anticipated, they are going to be and that we are going to see more expenses strong out the rest of the year or is it about the.

[Steve Kovzan:]

Yes. I would say that as we continue to build out the licensing and permitting platform in Gov2Go, we may see a modest progression in expenses over the rest of the year, but they weren’t in terms of where we kind of plan them to be for the first quarter to my thing we are in a pretty good shape.

[Gary Prestopino:]

Okay thank you.

[Steve Kovzan:]

Thank you, Gary.

[Operator:]

[Operator Instructions] Our next question comes from Allen Klee with Sidoti & Company. Please go ahead.

[Allen Klee:]

Yes, hi. Just wanted to follow up on taxes again, when you talked about the domestic production activity deduction, it seems like you have got the benefit from that last several quarters. Could you explain that a little bit and possibly, how if it is possible that could of kind of go on for the next few quarters? Thank you.

[Steve Kovzan:]

Yes. Hi, Allen. This is Steve. We again are recognizing that deduction in the third quarter of 2016. So we might see a little year-over-year benefit in terms of a lower rate, because of that for certainly the first quarter and the next quarter in the second quarter, but then we should kind of catch up on a year-over-year basis beginning in the third quarter.

[Allen Klee:]

Okay. And then for the Wisconsin hunting and licensing where you talked about working on Department of Transportation. Can you – I don’t know if I fully guide how much additional cost – I don’t like to was unsure if that for the quarter or for the whole year and then when you say that it could generate up to $2.5 million to $3 million annually, what’s the time to think a little more of one that could starve. Thank you.

[Steve Kovzan:]

Sure, no. I think what we have said, we certainly intended to say was that kind of beginning in the second quarter, we expect to incur at least $300,000 a quarter for the rest of this year to build out the system. I think there is, we are targeting a pilot launch in mid-2018 and for launch shortly thereafter, probably second half sometime in 2018. You there, Allen.

[Allen Klee:]

Yes thank you very much.

[Steve Kovzan:]

Okay, sure. Thanks, Allen.

[Operator:]

And there appear to be no further questions at this time. I would like to turn the conference back over to Mr. Herington for any additional or closing remarks.

[Harry Herington:]

Thank you. I thank you everyone who joined us this afternoon. We are excited to celebrating our 25th anniversary this year. And during our 2017 Annual Stockholder Meeting tomorrow, at 10

[Operator:]

Ladies and gentlemen that concludes today’s presentation. Thank you for your participation. You may now disconnect.